Hole-in-the-Wall Banking Transforms People's Access to Money

ATMs, or the automated teller machine, were the brilliant brainchild of several inventors who each capitalized and improved on an idea far ahead of its time when it was first conceived. An early and not-so-successful prototype was first conceived in the late 1930s when the idea of a hole-in-the-wall machine that would allow customers to make financial transactions was conceived. This invention was tested for approximately six months at a bank in New York City. However, it was determined that demand for such a service was low and the field test was discontinued.

Many experts acknowledge the earliest patent date for a modern ATM was in 1966. The development of the first free-standing ATM followed; and an ATM was soon installed at a bank in London. An English comedy actor is noted as the first person in the country to use the cash machine on June 27, 1967. The machine distributed pre-packaged envelopes which contained ten pounds sterling. The idea of a persona identification number (PIN) was also conceived around this time and later, the concept of storing a PIN on a card was developed.

Shortly afterward, the modern, networked ATM was developed and patented by yet another inventor, along with some investors. It was eventually installed at a bank in New York. The first ATM dispensed only cash, but was followed soon by a machine that offered full automated services, including deposits, transfers, cash advances, and more.

Initially, the ATMs operated off-line - money was not automatically withdrawn from a checking or savings account. At the time, accounts were not computerized. Therefore, banks were very selective about who received ATM privileges. Most often, ATM users were those who were credit card holders with good banking records. The inventors then developed ATM cards, which consisted of magnetic strips and a PIN to gain access. These cards differed from credit cards in that they had to include account information contained in the card's magnetic strip.

Today, estimates suggest there are more than 1.5 million ATMs worldwide. Most machines are connected to interbank networks, which enable individuals to utilize machines for banking purposes that do not belong to the bank where the customer has their account or even in the same country where the account is held.

Besides being located on a bank's premises, ATMs can be found in shopping centers, airports, grocery stores, gas stations, or other commonly used public spaces. The ATMs at these places are either on premise or off premise. On premise machines are advanced systems that allow multi-function and are connected to an actual bank branch. Off premise machines are installed by a financial institution or an Independent Sales Organization (ISO). These machines typically provide strictly cash services and are therefore cheaper, singular-function devices.

Although ATMs may have been originally conceived as cash dispensers, the system has developed to include many other functions as well. Fully integrated international ATM networks may also offer functions not directly related to management of a bank account. For instance, some ATMs can pay routine bills such as utilities, taxes, and legal fees; print bank statements; dispense postage stamps or lottery tickets; or recharge a pre-paid cell phone.

With the advent of online banking, ATMs have also provided a convenient method to access and manage one's finances for those who prefer to do their banking outside of the traditional brick-and-mortar bank. In fact, today's automated system means never having to enter the bank doors if one chooses. Hole-in-the-wall banking has certainly come of age.